At $40-70 billion in estimated insured losses, Hurricane Ian is the nation’s second most expensive natural disaster for the insurance industry. Less than two months later, Hurricane Nicole made landfall in Florida. Securing insurance coverage for these losses will be an important part of rebuilding and recovery.

Recently, Reed Smith’s insurance coverage lawyers hosted a webinar, “Maximizing Insurance Recovery after Hurricane Ian,” to answer several frequently asked questions policyholders ask (or should ask) to ensure maximum recovery after these natural disasters. We summarize a few of those answers below.

What type of insurance coverage applies? Property Damage? Business Income? Ordinance and Law? Service Interruption? All of the above?

Put simply, the answer is: It depends on the facts and the language of the policy, but one or more types of coverage may apply. For example, a policyholder may have property damage coverage if they sustained physical damage to buildings, business property (e.g., machinery, equipment, raw materials, etc.), or property of others in the policyholder’s control. That same policyholder may also have service interruption coverage if they experienced dislocation of utility or telecommunications service and suffered business income losses as a result.

All types of common coverages are discussed during the webinar, which can be viewed on demand.

Are policyholders obligated to do anything before they can obtain coverage?

Yes. Insurance policies typically have provisions that impose numerous obligations onto policyholders (called “post-loss conditions” or “duties after loss”) that they must comply with to obtain coverage. These are meant to help insurers conduct a reasonable investigation of the loss and make a decision on the claim.

One example is the proof of loss. It is a sworn statement signed and, often, notarized by the policyholder that claims the amount of money requested from the insurer. Proof of loss provisions typically require policyholders to submit a proof of loss, if requested by their insurance company, within 60 days.

Other examples of duties after loss include:

  • notice
  • duty to mitigate
  • the cooperation clause
  • an insurance company’s document requests and records
  • examinations under oath
  • appraisal
  • the suit against us clause

Our webinar panel explains each of these post-loss conditions and provides policyholders with practical tips on how to properly comply with them.

Are disputed claims always resolved in court?

No, not always. Sometimes disputed claims can be submitted through appraisal, which is an informal out-of-court process used to determine the amount of loss. Many policies contain an appraisal provision that can be invoked by either the policyholder or the insurance company. In Florida, parties may compel appraisal so long as the policy language determines that appraisal is mandatory and all post-loss conditions (discussed briefly above and at length in the webinar) are complied with.

The speakers go over several important considerations and strategies for handling disputed claims through appraisal during the webinar.

What is the difference between “wind” and “flood”, and why does it matter for insurance coverage?

Commercial property policies typically treat wind damage and flood damage differently. Some policies, for example, have substantially reduced sublimits for flood damage while others exclude coverage for flood damage outright. Thus, it is important that policyholders carefully examine the “cause” of their loss and assess whether there are multiple causes.

The webinar further explains this distinction, provides a high-level survey on the causation doctrines that states apply throughout the country, and flags an important provision in the policy for insureds to keep an eye out for, as it could affect what doctrine applies and, therefore, what coverage is available.

What are some tips on how to preserve coverage?

  • Give written notice to the insurance company as soon as possible. Many policyholders make the mistake of waiting for complete information before providing notice. Don’t. When preparing a notice, policyholders should do so in writing, and include all known losses, plus a catchall to cover losses that may be discovered after the fact. Policyholders then can provide their insurance company with updates once available. Ultimately, there is no harm in providing notice and the failure to do so can bar coverage. Give notice ASAP.
  • Properly quantify your claim and hire experts if needed to do so. When quantifying your claim, you do not necessarily need any particular type of evidence, but the general rule is the more evidence, the better. Consider hiring an accounting firm that specializes in property insurance coverage accounting if your claim is big enough.
  • Be aware of deadlines both in the policy and under applicable law. Failure to comply with deadlines may bar coverage, so it is important for policyholders to read their policies and keep an eye out for any deadlines, such as time limits to submit a proof of loss. Florida property policyholders should also set a reminder on their calendars for September 28, 2027, as it is the last day to file a breach of contract action pursuant to Fla. Stat. § 95.11(2)(e).

The speakers offer additional tips on how to preserve and maximize coverage throughout the webinar.

Florida’s recent (and anticipated) legislative changes to its property insurance landscape

Florida recently made several legislative changes to its property insurance landscape. Insurance companies, for example, now cannot refuse to insure roofs due to age if the roof is less than 15 years old.

The state legislature made changes to laws governing attorneys’ fees as well. In short, the right to obtain attorneys’ fees is not assignable; there is a presumption that attorneys’ fees based on the Lodestar method are reasonable, and defendant insurers are permitted to recover attorneys’ fees if a policyholder’s Notice of Intent to Initiate Litigation is deemed deficient.

Florida also recently enacted section 627.70132, Florida Statutes, which imposes on property policyholders a two-year deadline to provide their insurers with notice of a “reopened claim” and a three-year deadline to provide their insurers with notice of a “supplemental claim.”

These are just a few examples of the legislative changes discussed in the webinar.

In October 2022, Governor Ron DeSantis announced a special session scheduled to occur in mid-December to discuss additional reforms to Florida’s property insurance landscape. Potential items that will be addressed include roof replacement costs, one-way attorneys’ fees, and rate increases for Citizens Insurance policyholders.

Florida’s bad faith statutory scheme

Section 624.155, Florida Statutes creates a legal claim that a policyholder can bring against its insurance company for bad faith after a policyholder establishes breach of contract. The law comprehensively defines what may be considered bad faith in Florida. Examples include failing to acknowledge or promptly respond to communication; denying claims without doing a reasonable investigation; or denying claims without articulating any reasoning for doing so.

Florida courts use a totality of the circumstances test to determine if an insurance company acted in bad faith. In assessing the insurance company’s conduct, courts may consider whether the insurer acted in a prompt or reasonable manner; caused any harm to the policyholder; ignored legal authority that supported coverage; or diligently investigated the facts related to insurance coverage.

If an insurer’s bad faith conduct is found to be frequent enough to be a general business practice, punitive damages may also be recovered.

View the webinar for more information on Florida’s bad faith statutory scheme. Our hurricane insurance coverage page also contains additional information and resources.